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On Null Industry

Author
Alice Katsuko
Perkone
Caldari State
#1 - 2013-03-04 01:42:58 UTC
This post was meant to go into the CSM minutes feedback thread, but they've been de-stickied, and I'm not entirely sure that anyone would bother to read something posted there now, especially with all the election spam. As well, I'd like to get feedback from folk with more large-scale industrial and especially mining experience, and that's more likely in this forum than elsewhere

The purpose is to look at ways of encouraging industrial activity in null, without breaking or otherwise unduly nerfing high-sec, or infringing on related play-styles.

To start, a quote:

Aryth wrote:
Greyscale asked the CSM if giving, say, infinite assembly lines at no cost would be sufficient to bolster null-sec industry.

^ This is the sorta thing that makes us cringe. Given that highsec is also no cost (effectively), where is the cost advantage to negate the M3 movement costs?


The limiting factor on null industrial production is not a lack of production slots.

In Feythabolis, and in post-alloy Cobalt Edge, most outpost manufacturing slots go unused most of the time. If manufacturing slot availability was a limiting factor, those slots would be in near-constant use, barring excessive use fees. In Feythabolis, manufacturing slots do not cost ISK. I suspect that in most null regions, this is the case.

While production slot availability in player-built outposts is pathetic, even on fully-upgraded Amarr factory outposts, additional production slots can be added fairly easily by setting up an industrial tower. Daily POS maintenance is fairly easy thanks to fuel blocks; importing non-local fuel can be annoying for a small operation, but all null alliances have a good logistics service that can handle such things. POS industrial activity is hampered by the primitive restrictions on access to blueprints and products, but can be overcome by the use of shell corporations, blueprint lockdowns, and good access management and security procedures. Everyone who has dealt with POS industry knows that the entire framework for POS industry needs a massive overhaul, but also that it is not an insurmountable or even a substantial impediment to POS industry. if anything, disincentivizing POS production would be a major error, as it would reduce the number of available targets in space.

So manufacturing slot availability is not, and will never be a limiting factor on industrial activity, even if POSes are never revamped.

To identify the limiting factor on null industry, we need only to compare the Drone Regions before and after the removal of drone alloys. Rogue Drone NPCs, which are the NPCs that spawn in the Drone Regions on the eastern side of the map, had no bounties or module loot until last year, and would instead drop alloys. These alloys had very low volume, but would refine into a lot of low-end minerals.

For example, a typical Drone Horde (Sanctum elsewhere) would yield on average approximately 680 Plush Compound. Each Plush Compound refines into 4096 units of tritanium, 1024 units of pyerite, 64 units of isogen and 4 units of zydrine. That is ~2.78M units of tritanium, or about a Rokh (10.7M units of tritanium) every four Hordes. Since drone alloys also had a huge compression ratio (each alloy is only 1m3), they could easily be exported to empire regions. Tritanium in the drone regions, for example, traded below Jita value.

Under drone alloys, the Drone Regions produced locally almost all of their T1 PvP ships, including capitals. Pilots not infrequently imported BPCs, and built ships, including capitals, with the drone alloys they looted. The excess minerals were funneled into a vast supercapital production industry.

When drone alloys were removed, local ship production dried up, especially on an individual level, and a few months down the road, Drone Region inhabitants, like residents elsewhere, were either importing low-ends from empire (usually compressed via modules), or importing ships wholesale. Since the drone regions did not get hauler spawns until very recently, and still do not drop any modules (aside from the rare officer mod), the drone region mineral supply is now substantially worse than elsewhere.

As the only change was the removal of drone alloys, and the associated mineral supply, it should be clear that the low-end mineral supply is the limiting factor on null industry.
Alice Katsuko
Perkone
Caldari State
#2 - 2013-03-04 01:43:45 UTC  |  Edited by: Alice Katsuko
There are two real questions. Is the lack of industrial activity in null a problem? And if so, what should be done about it?

I am not entirely sure that there is an actual problem to be solved. The current system works, albeit imperfectly, and creates a web of interdependence between high-sec and null. Any potential solution would require severing or at least severely restricting the flow of goods between high-sec and null. And obviously, boosting null low-end mineral supply will undoubtedly make it much easier to build supercapitals, which may or may not be desirable.

On the other hand, we're facing a situation where the income from mining low-ends in high-sec will soon be nearly equal to the income from mining high-ends in null and in wormholes. While that will reduce incentive for cherry-picking high-ends in null asteroid belts, it also will eliminate ISK as a reason for miners to live in null; perhaps protection from James315 and suicide-gankers will be sufficient, but maybe not.

More worryingly, it seems as though minerals are still heavily under-valued for the time required to mine them; we may see further price increases down the road, if indeed there are large stockpiles of low-ends from the drone alloy days keeping ship prices down. Only CCP's statistics team knows the exact state of the game's mineral stockpiles, but it is something to consider.

http://jestertrek.blogspot.com/2012/04/price-is-right.html

Encouraging industrial activity in null will create more targets, and may increase player interaction, decreasing the chances of a player dropping subscription, so there are definite benefits towards encouraging null industrial activity.

***


Assuming that there is a reason for boosting null industry, we must look at ways of increasing the supply of low-ends in null, in order to enable that industry to occur. To do that, we have to see why there is an undersupply of low-end minerals.

First, current null asteroid belts have fairly little low-end content, and are heavily weighted towards high-end minerals. For example, the level 1 grav site - Small Asteroid Cluster, contains less than 3M units of tritanium, or just over a quarter of the minerals needed to produce a Rokh. But it has enough megacyte for 71 Rokhs.*

I have made a spreadsheet for the mineral content of the respawnable hidden belts, based on the most recent numbers I could find, and showing how many Rokhs can be built from the minerals obtained by completely stripping a given belt. It may be downloaded from here.

Second, there are relatively few miners in null. This is for four reasons:

(1) As noted earlier, the ISK/hour from mining in high-sec is approaching the ISK/hour of mining in null. So the financial incentives to deal with the hassles of null are decreasing.

(2) Most null alliances treat miners as third-class citizens.

(3) Alliance taxes on refining encourage shipping as much ore as possible to high-sec, potentially creating an idiot loop where low-ends are exported to high-sec to evade alliance taxes, then re-imported from highsec to meet demand. (I **** you not, this was happening in Cobalt Edge until someone had the bright idea of the alliance buying minerals at Jita prices)

(4) The mining skill tree is entirely separate from the PvP skill tree, and a good mining character requires substantial SP investment to make good ISK. This poses a substantial barrier of entry for null residents with one account, who may not want to spend a minimum of two months training mining skills that do not help them do what they consider fun (blowing ships up).

I wrote last year, when drone alloys were to be removed, that more people would mine as ore prices increase, thereby substantially offsetting the loss of drone alloys as a source of low-ends. This hasn't happened, in part because I did not give sufficient weight to the above.

Third, shipping minerals from high-sec to null for T1 production without module compression is atrociously inefficient. A max-skilled Rhea (367,968m3) can hold about 36.8M units of tritanium, or enough for three and a half Rokh hulls. A Rhea can move seven packaged Rokh hulls (50,000m3) and all of the required fittings in the same trip. The calculus changes substantially if module compression is used to move the tritanium, but comes with its own costs -- of buying the modules on market at a markup, or investing into the infrastructure for acquiring minerals and building the modules. The exception is capital/supercapital production, where the enormous volume of low-ends required makes module compression the only option.

In short.

Arrow The physical local supply of low-ends in null is limited, and the high-end mineral market would crash if the grav belts in null were to be stripped to supply local demand.

Arrow There are only so many miners, who are not as interested in entering null. Players are put off from investing the SP to become high-yield miners.

Arrow It is more efficient, outside of capital/supercapital production, to haul ships rather than minerals.


* Rokhs seem to be fairly common as a main fleet doctrine nowadays in sov war. Abaddons are another contender. A perfect Rokh blueprint consumes 10,783,548 tritanium
Alice Katsuko
Perkone
Caldari State
#3 - 2013-03-04 01:48:09 UTC
I can think of three potential solutions. I will not go into great detail here; that is best left to professional game designers. But broadly:

The first, and perhaps the easiest is to do nothing. The current system works, and the flow of goods between high-sec and null creates a web of interdependence that is a good source of content. The supply lines come under attack (see the current N3 campaign against Solar supply lines in the LEM/LXQ area), and have to be defended. Events in null can have a substantial impact on high-sec mining and industrial activity, and vice versa. The null demand for ships (and minerals) probably accounts for a substantial portion of the high-sec mineral and ship market, and severing that link may do nasty things to high-sec mineral prices, but this is something that I cannot say for certain. If null industrialists need minerals, they can always add more accounts, mine stuff themselves, or create incentives for local mining activity. And if the prices are right, they can farm out mineral extraction to renters.

The second, is to increase the amount of low-end minerals in high-end ore such as Arkonor, Bistot, and Crokite. These will become the old Plush Compound, yielding a lot of low-end minerals that can be used in local consumption. Jump freighters cannot hold substantial amounts of low-end minerals, but nonetheless, care must be taken to avoid the old problem presented by drone alloys. Module-based mineral compression will have to be nerfed severely, perhaps through a substantial reduction in reprocessing efficiency for Meta-0 modules. Especially problematic will be shallow null, since hidden belt spawns are unaffected by truesec. In short, this will require substantial work in order to avoid re-flooding high-sec with cheap low-ends.

The third, is to more closely link the high-sec and null mineral markets, by substantially reducing the costs of moving minerals over long distances. For example, by reducing the volume of minerals; or by introducing blueprints for the old drone alloys, which have enormous compression ratios. The ISK/hour of mining in high-sec and mining in null will thereby become nearly equivalent in the long run, although they're tending toward that already. Of more concern is the final equilibrium price of low-ends, given the amount of time it takes to mine the low-ends for a ship, relative to the price of those low-ends. Ultimately, the time it takes to mine the minerals for a ship will be about equal to the time it takes to run anomalies/missions to buy that same ship.
mynnna
State War Academy
Caldari State
#4 - 2013-03-04 02:20:59 UTC  |  Edited by: mynnna
A few points. First, the quote you commented on - Aryth was indicating worry because taken at face value, it shows that Greyscale doesn't have a clue why nullsec industry is broken.

Alice Katsuko wrote:

As the only change was the removal of drone alloys, and the associated mineral supply, it should be clear that the low-end mineral supply is the limiting factor on null industry.

Everyone knows this, but it's facetious to definitively claim that slots aren't a problem because they're not in use. They're not in use because it's not really worth using them when you can simply ship in from highsec instead. Whether there would be enough slots to support lively local industry is a question we can't answer, since lively local industry doesn't really exist.

Alice Katsuko wrote:
I wrote last year, when drone alloys were to be removed, that more people would mine as ore prices increase, thereby substantially offsetting the loss of drone alloys as a source of low-ends. This hasn't happened, in part because I did not give sufficient weight to the above.

There is ample evidence to suggest that more people are mining than ever before - just look at the graph indicating mining volume in this dev blog. However, I've made estimates in the past, and the drone regions (plus refined rat loot, which was nerfed when they cut the refining values of meta 1-4 drops in half) made up something like 40-70% of low end mineral supply in the game. Mining has not increased so much that it makes up the difference - if it had, low ends would also be cheap.

Alice Katsuko wrote:
Third, shipping minerals from high-sec to null for T1 production without module compression is atrociously inefficient. A max-skilled Rhea (367,968m3) can hold about 36.8M units of tritanium, or enough for three and a half Rokh hulls. A Rhea can move seven packaged Rokh hulls (50,000m3) and all of the required fittings in the same trip. The calculus changes substantially if module compression is used to move the tritanium, but comes with its own costs -- of buying the modules on market at a markup, or investing into the infrastructure for acquiring minerals and building the modules.

Not to mention having to freighter the minerals around twice - once in empire, and once at fairly high risk in nullsec, and then possibly a third time in the form of finished ships, moving them from factory to hub. Importing packaged hulls is safer, faster, and more convenient - that's why people do it.

Alice Katsuko wrote:
Arrow The physical local supply of low-ends in null is limited, and the high-end mineral market would crash if the grav belts in null were to be stripped to supply local demand.

Have you looked at high end minerals lately, or since approximately "forever"? It looks like you only started plating early 2009. Because of that, you may be unaware that before the drone regions were a thing, zydrine cost 4-5k per unit, megacyte cost 8k or more. High ends were actually "high", in other words. When the drone alloys existed, everything was cheap. When the drone regions were nerfed, low ends got expensive for the reasons explained above, but high ends continued to be relatively cheap, because more of them are produced than can be used with the supply of low ends. Supply exceeds demand, so the price is low.

Alice Katsuko wrote:
The first, and perhaps the easiest is to do nothing. The current system works, and the flow of goods between high-sec and null creates a web of interdependence that is a good source of content.

On the other hand, providing nullsec with both a local supply of minerals and the improved means to use them provides local content at a scale that is not "full scale invasion". The mechanics of Tech II and Tech III industry will continue to guarantee a requisite interdependence between high and nullsec - you cannot build Tech II without moon minerals from other parts of the galaxy, necessitating trade, and that's done through Empire.

While I'll grant that enabling nullsec to source low end minerals would likely crash low end prices, I see no problem with this. Low end prices were low before the drone regions came into existence, and they were low while the drone regions existed. The only reason they are as high as they are now is because of their increased scarcity compared to high end minerals, and that's an imbalance I have no problems with fixing... especially since it creates (courtesy of mackinaws especially) a decidedly skewed risk:reward and risk:effort ratio.


Now, on the subject on "should it happen" - at one point, CCP believed so. To quote:

99% self-sufficient by volume
For further discussion. People building things in nullsec should only need to travel to empire (or more than a couple of regions across nullsec) for low-volume supplies. This requires that industrialists have a ready supply of low-end minerals available nearby in nullsec, without breaking other systems or goals. (Likely means some way of mining low-ends in a massively more rapid manner compared to current tools.)


That was a year and a half ago - who knows what they think now. But at one point, it was a goal they had.

Member of the Goonswarm Economic Warfare Cabal

Alice Katsuko
Perkone
Caldari State
#5 - 2013-03-04 04:59:59 UTC
Won't be using quotes, because of the restriction on character count, but will try to reply point by point.

Arrow I thought that everyone knew this as well. But then we get the above quote, and I start to wonder.

It's not facetious to say that slots aren't a bottleneck to null industry. Bottlenecks tend to be utilized at maximum capacity. From what I recall, station industry slots were in short supply back when drone alloys were a thing in the drone regions, but the fact that industrial activity was much higher there than in the rest of null suggests that station slot access was not a substantial limiting factor, if it had any sort of meaningful impact at all. Most big industrialist did not have much trouble setting up production towers.

At the least, station slot access is so insignificant compared to the low-end mineral bottleneck as to be irrelevant. An overhaul of POS industry would be a much better solution to slot access than expansion of slots either way. I'm not saying that expansion of access to manufacturing sots would be a bad thing, but rather that it won't do anything for the problem we want to solve.

Arrow I've heard that mining activity is up, but it hasn't gone up nearly as I, and perhaps CCP, has expected. Either way, the supply of low-ends has decreased substantially, hence the increase in low-end prices. I'd really like to see some numbers on low-end production versus consumption, but that's not something we're going to get. If your estimates are correct, then we're looking at major price increases for T1 ships down the road. That will be offset in part by greater use of T1 cruisers, which can be frighteningly effective, but probably not to any substantial degree. And that is not going to anything good for PvP activity.

In the long run, since mining is now the primary source of minerals, the time/effort spent mining a ship will approach the time/effort spent grinding ISK for it. According to Ripard, it takes about two hours to mine the minerals for a Drake using a well-skilled Hulk. A similarly-skilled player can make about 90M per hour in null anomalies or in high-sec incursions. So in theory, a Drake's natural price under current game mechanics should be somewhere in the area of 180M. That's a frightening number. Incursions do take more effort than AFK mining, but not much more effort than grinding missions or running anomalies, and the risk for all of them is approximately 0 nowadays.

Arrow Moving freighters around in null isn't all that risky, if done properly, but it is an utter pain, especially for high-volume production, and is time-consuming due to the need for scouts and web alts, unless you move freighters via titan bridge or something. There's really no reason to make anything in null aside from ammo and rigs from a financial standpoint, because it's both cheaper and more cost-efficient to produce almost everything in high-sec. Any extra costs more than pay for the convenience.

Arrow My purpose was to refute CCP's old position that the actual quantity of low-end minerals in null belts was fine, and the undersupply of low-ends in null was due to lack of mining activity. The amount of mining activity it would take to supply null with low-ends out of current grav sites would supply so many high-end minerals that the market for them would implode.

I started playing after drone regions were introduced into the game, so I don't have much knowledge of what the mineral market was like before then. If you have a good source for historical mineral prices, would be very interested in seeing it. From what I can tell, high-end prices have been dropping over the past year, while low-ends have been increasing, but I could be wrong. Either way, low-end and high-end ore values have been approaching one another since drone alloys were removed; that's probably because the actual cost (what you'd call 'risk') of mining in null is close to the cost of mining in highsec. In high-sec, revenue is somewhat lower (for now), but there is a chance of suicide ganks; in null, revenue is higher, but there is a chance of getting distracted and not noticing a red in local, and of the occasional awoxer.

Arrow CCP has changed its mind before about what null should be. It abandoned Dominion's vision for null as self-sufficient, high-profit, and high-activity before, most notably with the truesec nerf. It's been a year and a half since the quoted document came out, and judging by some of the things said at the CSM minutes, I'm not sure how much they're sticking to the plan laid out therein.

The drone region nerf was done in no small part in order to buff high-sec mining. Assuming that CCP was paying attention to what minerals drone alloys produced, they would have known that the big buff would be to low-end minerals. So I'm not sure to what extent they'd be willing to roll back on that. If I understand correctly, their plan was for high-sec mining to be as profitable as high-sec mission running. Under drone alloys a miner made somewhere around 10-15M ISK/hour, hardly on par with L4 missions.